Why Gun Traffickers Should Live in Arizona

A new study by Brian Knight, an economist at Brown, explores the flow of illegal firearms in America and compares the source of guns used in crimes to gun laws in and around that state.

How big is the market for illegal firearms? Pretty big. Knight writes: “ATF investigations into tracking between July 1996 and December 1998 identify over 84,000 firearms that were diverted into this secondary market (ATF, 2000).” Meanwhile, each state in America legislates its own gun laws, resulting in cross-state externalities. For example, Knight cites anecdotal evidence showing that a gun purchased legally in Virginia for $150 – $200 typically resells in New York City for $500 – $600. This is the sort of thing that keeps Michael Bloomberg up at night.

This paper provides a theoretical and empirical analysis of cross-state externalities associated with gun regulations in the context of the gun trafficking market. Using gun tracing data, which identify the source state for crime guns recovered in destination states, we find that firearms in this market tend to flow from states with weak gun laws to states with strict gun laws, satisfying a necessary condition for the existence of cross-state externalities in the theoretical model. We also find an important role for transportation costs in this market, with gun flows more significant between nearby states; this finding suggests that externalities are spatial in nature. Finally, we present evidence that criminal possession of guns is higher in states exposed to weak gun laws in nearby states.

Knight found that:

States with strong gun laws tend to have their laws weakened by states with weak gun laws.

States with weak gun laws tend to have their laws strengthened by states with strong gun laws.

State size matters — small states are more affected by trafficking, the classic example being the District of Columbia (which isn’t quite a state, but you get the idea).

About one-third of guns used in crimes come from out of state. There is a spatial aspect to the flow of illegal guns, of course, and a state with tough gun laws next to a state with weak ones is much more likely to have a higher supply of illegal firearms. So it would be ideal for gun runners to live in states like Virginia, Arizona and Missouri, unless of course we’re talking about Jax Teller in Charming, California.

COMMENTS: 33

I wonder if the study controls for other factors before lamenting weak gun laws? It would seem to me that states that have less guns owners to start with are more likely to pass stricter gun laws, as fewer constituents would be outspoken against such measures.

If we assume that demand for black-market weapons is stable across geographies, then states which have historically had a lower incidence of firearm ownership would necessarily have fewer potential supply chains (each gun owner represents a potential supply chain, remember, as theft is the most common means of illegally acquiring a firearm). If stricter laws are merely indicative of a market where supply of illegal firearms is already below equilibrium (for the criminals), then the laws themselves may have little or no impact on market dynamics. I would argue that states that have a naturally lower supply of guns should of course be net importers, regardless of gun legislation.

So to assume a causal relationship, that infers anything more than that products move from where there is excess supply to where there is excess demand, may be misleading. While the legislation may be an indicator of whether a particular state has excess supply or excess demand, any inference that such laws impacted the inter-state trade of illegal weapons may not be accurate.

Does lower supply of guns cause stricter gun laws, or do stricter gun laws cause a reduction in supply? States like California, which had a lower firearms ownership rate in the 1990s, succeeded in passing stricter gun control laws (weapons bans, etc.); Florida, which has a high ownership rate, succeeded in passing some of the most liberalized gun laws in the nation (they were one of the first to expand concealed carry, for instance).

Who knows, maybe this could be a jumping off point for a chapter in your next book?

I want to address this sentence: About one-third of guns used in crimes come from out of state.

What if one-third of all guns in that state come from another state, which is quite logical as the market for resell of firearms is quite large as they tend to be long-lasting goods. Then this would just mean that guns in crimes are the same as guns in usage which would say nothing special about guns in crime. But what if more than one-thirds of guns in legal usage are from out of state? Then guns used in crimes would be more likely to come from the state in which they are used than normal guns.

I think it’s even simpler than that. If 1/3 of guns used in crimes come from out of state, then the other 2/3 of guns used in crime come from within the state. So then it is correct that the gun used in a crime is more likely to come from within.

None of that says anything about where the legally-used guns come from, so all of that would be speculation — but not really relevant to the discussion I think. I imagine in many states guns from out-of-state are illegal by definition?

But I think what the paper is getting at is not so much that guns used in crimes are more likely to come from out-of-state; the authors are simply asserting that interstate weapon trafficking makes some significant contribution to gun crimes.

“I imagine in many states guns from out-of-state are illegal by definition?”

Not really – I can’t think of any state that bans guns that came from other states; quite the contrary, many states exempt guns that might not otherwise comply with their own laws if they were legally possessed by someone moving into that state. Both California and Massachusetts have approved rosters for handguns, where only models listed are legal to purchase. However, both CA and MA allow off-roster guns to be imported legally by people who are moving into the state.

Some states which have an “Assault Weapon Ban” may mandate that some guns (typically rifles) be modified – you may have to change an adjustable stock to a fixed stock, for instance, or disassemble 30-round magazines and only use 10-round magazines – but assuming you’re willing to make the modifications, you can still legally possess your firearm.

It appears to me that the language used here reflects a pronounced bias. If I buy a book, a computer, or a car in one state and take it to another state, it is merely a fact: I’ve moved. But if I buy a gun in one state and take it to another state, I’m now an illegal weapons trafficker?

If you move your car from one state to another you still need to register it in the new state. If you move your gun (or any other product) from one state to another you would also need to follow the laws for the new state.

So no bias, unless you consider that there are laws for owning/buying guns and not for owning/buying books a bias.

I think James was just pointing out that just because a gun was originally purchased in another state, it doesn’t necessarily imply that anything illicit was involved in the importation.

Many guns, for instance, qualify under federal law as something called “Curios and Relics.” There are a number of “03 FFL’s” (Federally- licensed collectors of Curios & Relics, who are exempt from several gun control laws when purchasing a qualifying weapon). I’m sure if a Russian Makarov pistol was recovered from a crime scene after being stolen from a C&R holder, the above study would classify it as being “from out of state,” even though the pistol may have never left the state’s boarders after being imported from Russia.

The same is true for police trade-in weapons. If you’re in the market for a S&W 4003 right now, the vast majority of those on the market are trade-ins from the Atlanta, GA police department. They’re extremely common in almost every state right now, and are high quality, affordable weapons that a first-time purchaser (who is less likely than a collector to have the infrastructure in place to properly secure his weapons) might be inclined to consider buying.

If the above circumstances account for just 10-12% of firearms in this country, that would imply that it’s not 1-in-3 guns that “come from out of state,” but closer to 1-in-5. After you take into account people who legally move each year…the real number of illegally-imported guns is much smaller than the headline number would seem to indicate.

Scott, I don’t dispute anything you’ve said in this post, but I don’t think that’s what James was saying. I’m struggling to find the language in the original post which shows the obvious bias that he was referring to.

How does a state with weak gun laws (a subjective term in itself) have them “strengthened” by nearby strong gun law states? This just seems to imply that less guns are brought in from the other state, but that is logical because people do not intentionally impose higher costs upon themselves.

I think the point was that people do not intentionally impose higher costs upon themselves unless they expect some increase in value, perceived or real. Theoretically guns from out-of-state in AZ would just be the same thing for a higher cost — more money, more risk of arrest, etc.

In your examples the people are getting additional value for their higher costs.

Now I haven’t read the study, so I could be wrong, but I think states that are close to each other usually have similar gun law “strengths” (excluding Vermont and California). But wouldn’t that just mean those people in that geographic area prefer a certain strength of gun laws.

Now if they studied it over time, i.e. Texas passes a law, then Oklahoma, Louisiana, etc. follow with adding or reducing gun laws in the same direction as Texas. That would then possibly show an inter-state effect.

Yes and no; New York and Massachusetts share a boarder, and are fairly similar with regard to gun laws (MA has stricter laws). But California and Arizona/Nevada share a much larger boarder, yet have widely divergent gun laws (CA has the most oppressive in the nation for gun owners, AZ is one of the friendliest states in the nation for gun owners, as is NV).

Honestly, it’s got more to do with the political leanings of the state than anything else. Blue states (California, NY, etc.) tend to have stricter gun control laws, red states (Texas, Arizona, etc.) have more liberalized laws. Even on a federal level, the two largest pieces of gun control legislation were passed under Democratic presidents – the National Firearms Act of 1934 during the FDR administration with a split Congress, and the Gun Control Act of 1968 under LBJ and a Democrat-controlled Congress. I’m not implying causation, but historically there is a strong correlation.

Let’s do a thought experiment with New York (a low ownership state) and Pennsylvania (an average-to-above average ownership state). NY has considerable excess demand, and PA has some excess supply. Given that the cost of living is higher in urban areas, urban workers demand higher nominal salaries than their rural counterparts, which gives them a higher price inelastic demand curve.

As a broker in illegal weapons, I notice that there is a rural area in PA that is more price elastic, and which has excess supply (which also drives prices down). I also notice that NYC has excess demand, and is already accustomed to paying higher prices for substitute goods.

Homo economicus would buy his inventory from rural PA, and sell it to NYC, maximizing profit. It’s basically a two market arbitrage model. This has the potential to put rural PA into a state of excess demand. However, because the NY consumers are willing and able to pay more for the product, PA may remain slightly below equilibrium.

The substitute to purchasing a black market weapon is sourcing your own from individual gun owners (i.e. burglary). In a state which has a high ownership rate, you will need to break into fewer houses before obtaining your target than you would in a state which has a low ownership rate. If the cost of burglary (prison) is constant between states, then PA will still be a producer, and net exporter, of weapons.

It’s a basic example of Pareto efficiency. PA is more efficient at producing weapons, and NY is more efficient at producing cash – so they find a mutually beneficial trade optimization. Here, PA would suffer 2 externalities: 1) they would have an above-equilibrium supply of burglaries, 2) they would have a below-equilibrium supply of criminals with illegal weapons; the reverse is true of NY.

I don’t agree with that logic. There is no fundamental limit to the supply of guns in Pennsylvania (in your example). Assuming the out-of-state demand is relatively stable there will just be more guns made in (or shipped to) Pennsylvania to meet that steady demand. If anything those excess guns available for the illegal trade would seem to make guns (legal or otherwise) even more common.

I’m not sure if I follow you completely here – I think the “fundamental limit to supply” would be that eventually, a burglar would get caught.

I would caution you not to confuse the legally-owned guns with the illegally-owned guns. The number of legal guns in PA shouldn’t really be affected by the number of illegal guns in PA; rather, it should assumed to be in perpetual equilibrium, as there are no restrictions that would impede the efficient market. The number of illegally-owned guns in PA is a function of the number of legally-owned guns, but this is assumed to have only a mild impact on the legal market. Perhaps as our supply chains (the victims of burglary) are made whole by insurance and replace the guns, and people who would otherwise not own a gun might do so in response to the hypothesized burglaries, the effect may slightly increase the demand for legal guns, the demand for legal guns could increase. But again, this would simply shift the demand curve for legal guns up, and would be met with a similar move in the supply curve.

I was only describing a two state system, so I could more easily demonstrate the Pareto aspect. Of course, the excess demand that might be created in PA in my example could potentially be met in part by imports from other states. However, as I noted, the cost of acquisition by burglary is relatively low, giving consumers (criminals) an alternative to importation.

That argument presupposes that home burglaries are the only significant source of illegal guns. In a state with lax gun ownership laws a good percentage of soon-to-be illegal guns are acquired legally (although perhaps fraudulently) in gun shows, gun stores or individual sales.

Gun shows and gun stores will be more common to meet this illegal supply (direct or indirect) and this will encourage more legitimate ownership as well (just as having another book store in your neighborhood would result in slightly more books sold/read). Any excess demand from illegal (or replacement guns) would be sopped up by more stores and more supply. Furthermore, as it’s been said, legal gun ownership will rise if there are perceived to be more bad guys with guns.

I think you also take some liberties with the details on those burglaries. I doubt that burglars who are looking for guns randomly target houses in the hope that they might have a gun to steal- they will target homes where they know the owner is likely to have a gun. There may be fewer such houses in one state or another, but the overall home burglary rate is not necessarily affected and the success rate of a criminal looking solely for guns would not be much different.

You may be right that criminals would have fewer illegal guns in Pennsylvania, but that would only be because the criminals there have more legal guns.

@Sam:
Firstly, let me point out that studies have shown that less than 1% of all illegally-owned firearms were purchased at a gun show – so I do discount that as a significant source of supply.

Secondly, straw purchases certainly do occur. However, the ATF traces every gun recovered at a crime scene, and traces them. They call the manufacturer/importer to see which distributor they sold the gun to, and then the distributor to see which FFL (federally-licensed gun store) the gun was sold to. At this point, ATF will knock on the door of the FFL and demand to see the dealer’s Acquisition & Disposition book and relevant 4473s (the federal form one fills out when purchasing a gun), to see who bought the gun. They then check that name against police reports. Using a false name is not possible when making a purchase from a licensed gun shop – every purchaser must subject himself to an FBI background check. In addition, a purchase of multiple handguns within 5 business days requires yet more paperwork, to more easily identify those who may be making straw purchases. Because of all this, the cost of acquiring a gun through a straw purchase is typically quit high – you have to compensate your purchaser for significant minimum sentences, and the relatively high likelihood that he will be caught.

In reality, the vast majority of illegally-owned guns were stolen at some point in their life – either from an individual gun owner, or from the gun shop itself (as was the gun used by the DC snipers). This is one reason that the ATF regularly audits every FFL’s inventory. It is much easier for a criminal to get his hands on a used gun than a new gun.

@Sam again:
As for the second part of your comment, I did not mean to imply that a burglar was necessarily looking for a gun; but it is more likely in a high-ownership state that a burglar will find a gun. As with most things that are the spoils of burglary, the burglar will likely try to liquidate the gun – to another criminal who specializes in the area.

But a criminal cannot, by definition, have a “legal gun.” Criminals must resort to the secondary market (other criminals) to source weapons. The background check systems used in all 50 states are identical. While a criminal who has so far in his career avoided arrest may buy a gun through legal means for personal use, this could not be prevented in a state with stronger gun laws, and as such should be ignored in a comparison of states.

I would be surprised if the vast majority of guns were actually a result of legitimate burglaries (as opposed to staged or claimed robberies), let alone serendipitous home robberies. It’s clear you have more real knowledge on the topic, I’m just trying to rationalize it in my head.

A convicted criminal may not have a legal gun, but what percentage of burglaries are committed by convicted criminals vs. not yet convicted criminals? I would suspect that in high gun ownership states a lot of criminals own their own legal guns (not the majority, but a significant number). That legal gun is going to be held on to (and more reluctantly used), whereas an illegal and harder to trace gun will be dropped much more quickly (thus skewing the pct of illegal guns used in crimes).

How do we reconcile your suggestion that burglaries will be more common in such states vs. Cralis suggestion that burglaries will be less common?

The supply of Illegal Firearms might be higher in those states where legal ownership is lower (whether due to laws, supply, or some other reason). Why? Because the armed criminal(s) is more likely to overcome a victim without a gun, and not get shot by a potential victim that does have a gun.

A criminal with an illegal gun does not have a good chance of success and being more powerful in a state where everyone owns a gun – the criminal is much more likely to be met with equal force and shot.

But a criminal with an illegal gun in a state with few guns is much more likely to be successful without being shot in return.

This could easily account for the flow of illegal weapons towards states with strict laws and low supply / ownership of legal guns.

But I would also like to point out that the study doesn’t seem to make a distinction between the movement of legal guns (that are not used for criminal activity) across state borders and the movement of illegal guns across state borders. In fact, it seems to indicate that ANY movement of guns across state borders are for illegal purposes only, which will severely bias the study.

This happens in some city’s in Texas. Someone will break into a house get shot and then I think house break-ins will slow for roughly 4-6 months and build up again untill another criminal gets shot. I would like to see how true or not this is.

You seem to be saying that a criminal in a high gun ownership state would not want/need a gun as much as one in a low gun ownership state. This doesn’t make sense, if anything it would be the opposite.

Not exactly. I’m saying that a criminal will not have a demand for guns in such a state because he is not as likely to engage in criminal activities that require guns.

Why break & enter in a home (or commit personal burglary on a random person) where the owner is likely to shoot and kill you? Wouldn’t it be safer to steal his mail or break into his car in a lot? Breaking & enter goes down overall because – without a gun – you are now inferior to the gun-wielding home owner. This is potentially lose-lose for the criminal. Gun demand is down because you aren’t going to need one for the more-safe criminal activity you engage in.

On the other hand, in a state where a criminal isn’t likely to encounter a homeowner with a gun the breaking & entering (or burglary) is much more likely. But in this case, doing it without a gun means you are an equal to the guy who is in the house. As a criminal you now have a demand for an illegal gun because it ensures you can overpower the homeowner.

I’m just saying this a potential cause for the demand of illegal guns in gun-strict states, and the lack of demand for illegal guns in gun-available states.

Legal guns are not used for these purposes because they can be tracked. The guy above who said that illegal guns may have been purchased legally for criminal purposes needs to take a good look at gun statistics from the FBI or the ATF – legal purchasers of guns overwhelmingly use them for legal purposes because the legal gun is tracked. These laws don’t hinder criminals because they avoid this potential danger by avoiding legal guns unless they can steal them from someone else – who will take the blame at least temporarily.

That theory is plausible and certainly worth exploring, although I question many of the assumptions that would support such a conclusion. My own assumptions are more along the lines of:

Most burglaries would happen when the gun-wielding homeowner is not (supposed to be) at home.
I think a professional burglar with a gun probably has an edge on the average homeowner caught unawares.
The chance of a gun on gun confrontation vs. the total number of burglaries is small.
The payoff from a successful burglary is much higher than that of breaking into a car or stealing mail, e.g.
An illegal gun is easier to obtain in a high gun ownership state.

“Most burglaries would happen when the gun-wielding homeowner is not (supposed to be) at home.
I think a professional burglar with a gun probably has an edge on the average homeowner caught unawares.”

Both of these are true, and why home burglaries still happen even in the heart of Texas. However, the __chances__ of being shot go up by many factors in pro-gun states with lots of legal gun owners. Enough so, that in some states the number of break-ins…especially when someone might be home…is much lower.

“The chance of a gun on gun confrontation vs. the total number of burglaries is small.”

Do you mean how many confrontations occur vs. how many burglaries? I don’t know the numbers on that. And one thing the NRA recently pointed out, most law enforcement agencies only count the number of such cases where shots are fired… very few count that cases where no shots were fired but a home owner had a gun. That situations is far more numerous. You rack a slide or point a gun at a criminal and most of the time they run.

“The payoff from a successful burglary is much higher than that of breaking into a car or stealing mail, e.g.”

“However, the __chances__ of being shot go up by many factors in pro-gun states with lots of legal gun owners.”

Sure, but is it 1 in 20,000 up to 1 in 5,000? I don’t see that as much a deterrent.

“Enough so, that in some states the number of break-ins…especially when someone might be home…is much lower.”

But is that due to gun ownership or other factors?

“Do you mean how many confrontations occur vs. how many burglaries?”

Yes, that is the key factor in the equation.

“And one thing the NRA recently pointed out, most law enforcement agencies only count the number of such cases where shots are fired… very few count that cases where no shots were fired but a home owner had a gun.”

But isn’t that the number (shots fired) we really care about? If a burglar is merely chased off when he encounters a homeowner with a gun then it doesn’t really affect his choice to burgle as much.

Well sure, but we could also argue that these criminals would be better off choosing to be investment bankers.

“By definition.”

I don’t think it’s quite that simple, but it certainly seems to be the case most of the time.

The bottom line is that I’m not convinced the evidence is clear that potential burglars in high gun ownership states are not committing those crimes because of fears of getting shot. Certainly there are some – e.g. casual burglars such as kids, and it may be more of a concern in states where people are trigger happy (e.g. Texas vs. Penn.). But I don’t think just doubling the gun ownership in a state would halve the number of burglaries, for example.

Even if the math worked out from an economic standpoint, common burglars are not very good economists IMO.

I think he’s just saying that the cost of being a criminal may be higher in high-ownership states, because there is an increased risk of fatality if you come across an armed victim. If the cost of engaging in criminal activity in general is higher, that raises the cost of acquisition of a firearm.

I’m saying that the demand for illegal guns will be higher in an anti-gun state because the gun is more useful – it makes the criminal more powerful than his victims and doesn’t have the potential of getting the criminal shot (because the potential victim is unlikely to have a gun of their own).

In a pro-gun state the criminal is less likely to engage in activities that puts him in direct confrontation with gun-wielding citizens, so his demand for illegal guns is less. Having a gun may get him shot – in fact, simply committing those types of crimes may get him shot – so he engages in criminal activities that do not need illegal guns, and thus demand for illegal guns is lower.

I’m not saying this is true, I’m just saying that I’ve never seen this angle examined before.

So gun trafficking within the states, is an issue? If I buy a gun in Texas, move to New Jersey, I not trafficking weapons. I’m mearly excersizing my right to move from one place to an other. Obviously, tha registration of a weapon as well as a car is nessary, but I am not trafficking.
Here is your issue if 1/3 of all guns that are involved in crimes come from out of state, does not all guns that come from out of state commit crimes. As a matter of fact I will wager that most guns in any state , with or without strict gun laws, are involved with crimes. Registered or not criminals usually don’t use guns.